Single Touch Payroll Update

Single Touch Payroll (STP) was introduced on 1st July 2018 for all businesses with 20 or more staff (substantial employers). The Bill to extend the Single Touch Payroll (STP) reporting requirements so they apply to all employers, regardless of the number of employees has now passed the Senate and will be Law.

This means STP is set to be rolled out in stages to smaller organisations with less than 20 employees as at 1 July 2019.

Whilst there are still elements of the STP rollout for smaller organisations that need to be defined by the ATO, what is clear is that you need to be aware of what STP is, and what it will mean for you into the future.

What do you need to know?

STP will require you to have your payroll transaction data transferred to the ATO each time your employees are paid. This may require you to use a software solution that will transmit the data to and from the ATO on your behalf.

This payroll or reporting system must be STP Compliant, so that each pay cycle you can report the following items to the ATO:

  • each employee’s name and tax file number (TFN)
  • gross amount paid
  • tax withheld on the gross
  • ordinary time earnings for the period, and
  • any superannuation guarantee obligations.

The ATO will then report to you each month or quarter the correct amount of PAYG tax withheld to pay in your activity statement. Also, each quarter there will be information available regarding your superannuation obligations to either pay the ATO clearing house or your independent provider.

As part of the new regime, the reports and liabilities owing will be available to you in real time. This means that, if you wish, you will be allowed to make payments towards PAYG tax withheld and superannuation contributions in your pay cycle before the due date.

If your system is already automated with reports that can provide the information listed above for every pay cycle, all you need to do is confirm if your product is STP compliant.

However, if your system is still manual it is now time to discuss and review your internal processes. The STP regime is mandatory for employers of more than 20 staff from 1 July 2018, and will be mandatory for all employers by 1 July 2019.

Our advice is to become STP ready to avoid any fines or penalties in the future from the ATO. In the event that you need a solution or just want your system reviewed, we are happy to help by advising a suitable cost effective solution.

Does STP apply to you?!

  • All businesses are now required to submit STP data to the ATO effective 1 July 2019. 
  • Businesses with 5 to 19 employees have been granted a 3 month grace period before penalties may apply.
  • Micro Businesses (4 or fewer employees) have been granted the option to submit STP data quarterly via their Bas or Tax Agent for two years.
  • Closely held businesses have been granted a 1 year exception.

We are here to help you through the process if you need it. Please do not hesitate to contact our office for support.

The laws relating to superannuation are changing and will potentially have a significant impact on your Self-Managed Super Fund (SMSF) from July 1, 2017

To ensure your fund is well positioned to take advantage of or to mitigate any negative impact to the legislative changes, relevant documentation may need to be in place prior to 30th June 2017. Failure to act prior before this date could mean it is too late.

The main changes are:

  1. $1.6 million is the maximum individual member balance, known as the transfer balance cap, which can be in pension phase with investment earnings being taxed at 0%. Any excess investment earnings received on a members balance above $1.6 million can remain in the fund, but the income will be taxed at 15%
  2. For members who are

    currently in pension phase or receiving a transition to retirement pension and have unrealised capital gains on assets within the fund there will be the ability to reset the cost bases of these assets before 30th June 2017 (as long as the asset was owned by the superfund as at 9th November 2016.) This could be an appropriate strategy where you have a significant member account balance.

  3. Transition to retirement pensions that continue post 1st July 2017 will no longer receive any tax exemption on the fund’s investment income
  4. Annual concessional cap is reduced for all members to $25,000 (previously $30,000 for under 50’s and $35,000 for over 50’s)
  5. Annual non concessional cap reduces to $100,000 (previously $180,000) and cuts out entirely when you have reached your maximum transfer balance cap within the fund of $1.6M
  6. High income earners threshold reduced to $250,000 per annum (previously $300,000). If you earn in excess of this threshold you will pay an additional 15% tax on your concessional contributions, known as Division293 taxation
  7. Removal of the 10% work test – you will be able to claim a personal tax deduction for a super contribution irrelevant of where you derive your taxable income

We are currently reviewing all of our clients’ superfunds and will be in contact with you if we identify that a member is currently withdrawing a pension from the fund and has a member balance in excess of $1.6M as you will be directly impacted by these changes with effect from 1st July 2017.

If you are withdrawing a pension and are approaching a member balance of $1.6M we shall also contact you to discuss actions that you may wish to take.

Please note if you have commercial or residential property within your superfund, or if you have an indirect investment via your superfund with a structure that holds property, and this has not been revalued recently this could have a direct impact on your current member account balance. Please contact us on 03 9757 5100 to discuss your fund.

Consideration also needs to be given to the changes to non-concessional contributions as this will have an impact on any members that would like to maximise the amounts they can contribute to the fund going forward.

For example if you are currently under 65 years of age and have not contributed any non-concessional amounts to your super within the last 3 years you could make a non-concessional contributions of up to $540,000 and utilise the 3 year bring forward rule prior to 30th June 2017, irrelevant of your current member balance.

Post 1st July 2017 if your current member balance within your superfund is for example $1.4M you will only be able to contribute further non concessional contributions of $200,000 as you will of reached the maximum allowable member balance of $1.6M. The rules will now prevent you from being able to contribute any further non concessional contributions.

Please ensure that you contact us if you wish to make non concessional contributions to your fund prior to 30th June 2017 so we can review your individual circumstances and advise you accordingly.

Have you thought about what will happen to your superfund monies in the event of your death?

Have you considered completing or updating your SMSF’s Binding Death Nomination (BDN)?

This is a document that you complete, in conjunction with your overall estate planning and seeking legal advice, that specifies who you nominate to inherit your superannuation member balance in the event of your death.

If you have more complex affairs, such as specific assets within your superannuation fund that you wish to be inherited by a particular person or you may wish to nominate more

than one person to superannuation a BDN may not you and you may need to consider preparing a SMSF Will which is similar to a normal Will but deals with only the assets that are held by your superannuation fund.

In any event you need to seek professional legal advice and you should also ask about any tax consequences of leaving superannuation monies to non- dependants.